The Labor Department on Wednesday said it was rescinding moves to broaden the definition of when multiple employers could be responsible for the same worker, known as “joint employer,” reversing guidance issued by the Obama administration.
So-called joint employer cases refer to those in which a business such as a restaurant franchisor can be said to control the workplace policies of another business, such as one of its franchisees. Until 2015 the DOL said joint employer status applied only to those companies with “direct control” over others. The definition was broadened under former Labor Secretary Tom Perez to include indirect control.
The expanded definition led to high-profile legal disputes. The National Labor Relations Board is currently deciding whether fast-food giant McDonald’s should be considered a joint employer in labor and wage complaints brought by workers against its franchisees.
“The rollback of 2015 and 2016 informal guidance on joint employment and independent contractors was welcome news for some businesses, particularly franchised brands and those employing contractors on a large scale, that had said the prior guidance had opened them up to additional liability,” the Wall Street Journal reported.
The Washington Examiner noted that the move “marks a win for business groups, which had staunchly opposed the Obama rule.”